The Rise of AI in TV Advertising: How Agencies Can Win the Next Frontier

The way audiences consume television has changed. While agencies weigh the differences between linear and streaming, the public has spoken: 85% of U.S. households stream on CTV devices. The verdict is final. Yet far too many agencies still chase this $33.35 billion market with yesterday’s playbook: manual planning, fragmented measurement, and creative built for passive, not engaged, audiences.

The real challenge isn't choosing between traditional and digital. Fragmentation across hundreds of streaming services, devices, and platforms has created a complexity that traditional buying methods simply cannot match. Add to this the pressure for granular measurement, real-world attribution, and personalized creative at scale, and you have an ecosystem that demands a new, AI-enhanced capacity.

Artificial intelligence isn't another pitch deck buzzword, but the new infrastructure rewriting television's long-established (and rapidly antiquated) economic model. The agencies winning today understand that AI amplifies human expertise rather than replacing it. They're using AI to transform disconnected data points into coherent strategies, static campaigns into dynamic systems, and broad demographics into precise behavioral cohorts. The planners and buyers driving these results aren't obsolete; they're operating at a level their predecessors couldn't reach.

This article examines how AI is redefining every layer of TV and CTV advertising, from initial planning through post-campaign attribution. We'll explore the specific applications driving measurable outcomes and discuss what agencies can do to catch up and close the gap.

AI in TV advertising: Why now?

The convergence of AI and television advertising was inevitable, but three forces have accelerated this union into an urgent business imperative.

The attention economy has atomized

Traditional television operated under a scarcity model: limited channels, scheduled programming, and captive audiences. Today's reality reveals a completely different picture:

• Netflix now commands 300 million subscribers, while Disney+ captures 5.2 million on its ad-supported tier alone. 
• Roku powers 30% of smart TVs sold. 
• Amazon Fire TV delivers 200 million monthly impressions. 

Each platform operates its own ecosystem, its own data universe, and its own buying mechanics. Media plans built for a traditional linear-network world collapse under this weight. 

Streaming platforms have also trained consumers to expect personalized, on-demand experiences. Netflix's recommendation engine, Amazon Prime's contextual suggestions, and YouTube's algorithmic feeds have created audience expectations that extend far beyond content discovery into advertising relevance. Viewers now actively reject irrelevant messaging, making traditional demographic-based targeting increasingly ineffective.

It’s no surprise, then, that a 2022 survey found 57% of viewers actually prefer CTV ads to traditional linear TV spots, provided those ads feel relevant to their viewing experience.

The economics of disruption

Second, the economics of TV buying have inverted. 

US CTV ad spending is projected to grow 13.3% in 2025, while linear TV ad spend decreases by the same percentage. This mirror-image shift represents more than channel migration. Programmatic buying now dominates, real-time optimization replaces set-and-forget campaigns, and outcome-based pricing challenges the traditional CPM-based negotiation and planning. The broadcast upfronts still happen, but the attention has migrated to the streaming platform's slate of original (and live) content (as advertisers discover they can achieve 23% higher ROI through CTV campaigns compared to traditional TV).

👉 For more on adapting campaigns in uncertain times, check out our guide to Marketing Strategies for Economic Volatility.

Beyond platform proliferation: The data advantage

Third, measurement has evolved from approximation to precision. 

Where Nielsen panels once extrapolated from thousands to millions, AI now tracks actual exposure across devices, links viewing to visiting, and connects impressions to transactions. 

Studies show that well-executed personalization can deliver an 8x ROI on marketing spend and lift sales by 10% or more. This granularity exposes the waste hidden in traditional buying while rewarding those who embrace data-driven decisioning.

The disruption runs deeper than technology. AI challenges the fundamental assumptions of TV advertising: that reach equals relevance, that demographics define audiences, and that creative speaks to everyone or no one. Smart agencies recognize these shifts as opportunity. Others stay stuck in analysis paralysis, missing what early adopters know: the path forward is clearer than it appears, and momentum builds quickly once you start.

💡 So, what is connected TV advertising? Connected TV advertising delivers commercials through internet-connected devices—smart TVs, streaming boxes like Roku and Apple TV, and gaming consoles—rather than traditional cable or broadcast signals. Unlike linear TV's one-size-fits-all approach, CTV enables precise targeting based on viewing behavior, demographics, and purchase intent, while providing digital-style measurement of who actually watched your ads. This fusion of television's sight, sound, and motion with digital's targeting and analytics represents the largest shift in TV advertising since color replaced black and white. For advertisers, CTV means reaching cord-cutters and cord-nevers with the accountability they expect from digital channels and the impact only television delivers.

5 ways AI is transforming TV & CTV advertising

The transformation is happening in campaign dashboards and planning rooms across the industry right now. While consultants theorize about AI's potential, performance marketers are already deploying these capabilities. 

Here are the five applications representing strategic opportunities for agencies that understand their implications.

AI-powered audience targeting: Beyond demographics to intent

Traditional TV ad targeting treated viewers as monoliths—adults 25-54, (a demo I lovingly refer to as a pangenerational), household income over $75K. AI shatters these crude proxies. By synthesizing first-party data, viewing behaviors, and contextual signals, AI identifies audiences by what actually matters: purchase intent, life moments, and behavioral patterns.

Consider how AI processes signals invisible to traditional planning. A spike in home improvement show viewing, combined with searches for contractors and visits to hardware store websites, reveals a renovation-ready household. AI platforms identify these patterns across millions of households in real-time, enabling campaigns that reach consumers at their moment of highest receptivity. 

Research indicates that consumers pay four times more attention to CTV ads that are contextually matched to the content they're watching.

The sophistication extends beyond simple behavioral matching. Every media planner who's ever fought for a smarter targeting strategy in a conference room now has the data to back their instincts:

• AI analyzes cross-device graphs to understand how the same household consumes content across smart TVs, tablets, and phones, preventing the waste of frequency caps blown by device-siloed targeting. 
• Privacy-compliant identity resolution ensures campaigns reach actual people, not just IP addresses.

Predictive performance forecasting: Seeing around corners

Every media planner wants to predict campaign performance. AI actually delivers it. By analyzing historical campaign data, seasonal patterns, competitive activity, and real-time market conditions, AI forecasting engines project outcomes with unprecedented accuracy.

These systems move beyond basic reach and frequency curves. They predict creative fatigue before it impacts performance, identify optimal day-parting strategies based on actual viewing patterns rather than inherited wisdom, and forecast competitive interference before campaigns launch. The sophistication allows advertisers to anticipate market conditions and adjust strategies proactively rather than reactively discovering performance issues mid-flight.

The real power emerges when predictive models put unprecedented capability in planners' hands. Campaigns become expressions of expertise backed by intelligence.

Creative optimization: Personalization at television scale

86% of ad buyers are using or plan to use generative AI to build video ad creative, according to recent IAB research. This explosion reflects a fundamental shift in how creative works in CTV environments.

AI enables dynamic creative optimization previously impossible in television. A single base creative spawns thousands of variations: different calls-to-action for different audience segments, weather-triggered messaging overlays, real-time price updates, and localized offers. A national QSR campaign might show breakfast items in the morning, lunch specials midday, and family dinners in the evening, all from the same core creative asset.

The technology goes deeper than simple versioning. AI analyzes frame-by-frame engagement data to understand which visual elements, narrative structures, and messaging sequences drive response. These insights feed back into creative development, creating a continuous improvement loop that traditional focus groups could never match. 

Research found that AI-optimized creative delivered 94.5% video completion rates compared to 70% for standard video ads.

Real-time bid decisioning: Every impression as investment decision

Programmatic TV advertising represents almost 90% of CTV ad spending, but most buyers still think in terms of targeting rather than investment. AI transforms each bid decision into a real-time ROI calculation.

Modern AI bidding engines evaluate dozens of signals in the 100 milliseconds before placing a bid: the value of the specific viewer based on their purchase probability, the creative's likely resonance with this audience, the competitive context of the pod, the publisher's historical viewability rates. They then bid precisely what that impression is worth to the campaign's specific objectives—not a penny more, not a penny less.

Budget allocation follows the same intelligence. AI systems continuously redistribute spend toward best-performing publishers, day-parts, and audience segments. This dynamic reallocation happens at a speed and precision that manual optimization could never achieve, turning what once took weeks of analysis and approvals into automated, data-driven decisions. 

Which means you spend less time in spreadsheets and more time doing what machines can't: building client relationships, crafting strategies, and spotting opportunities that only human experience can recognize.

👉Learn more about protecting your brand and investments in our article on Safety in Programmatic Advertising.

AI-enhanced measurement: Finally answering "Did it work?"

Measurement has long been CTV advertising's Achilles heel. AI transforms this weakness into a strategic edge by connecting previously invisible dots between exposure and outcome.

Modern AI measurement platforms unify fragmented signals across walled gardens to create a holistic view of campaign impact. They track not just who saw an ad, but what they did next—website visits, store visits, purchases, and brand searches. Advanced systems even capture offline attribution, using statistical models to connect TV exposure to in-store sales lift. 

23% of CTV viewers make a purchase after seeing an ad, compared to 12% for linear TV, but only AI-powered measurement can reliably capture this full journey.

Attention measurement represents the frontier. AI analyzes room-level data to understand whether ads played to empty rooms or engaged viewers, adjusting future targeting accordingly. Brand lift studies that once took months now run continuously, feeding real-time insights back into campaign optimization.

👉 Curious where AI might fall short? Explore What’s the Biggest AI Blind Spot in Advertising Today?

Does TV advertising work?

Short answer: Yes. The real question: which TV advertising works, for whom, and under what conditions? Moreover, the answer depends entirely on how you define "work" and what metrics you use to evaluate success. 

As mentioned, CTV ads not only boast a 94.5% video completion rate but also drive results, with 23% of viewers making a purchase after seeing an ad. This is what I call active engagement: audiences in control of their content and open to relevant advertising.

Even linear TV, with all its declining economics, still reaches 228 million U.S. viewers, boasting an ad attention rate of 54.5% and providing the mass reach brand builders crave. 

Both formats leverage television's unique strength: large-screen viewing that creates cognitive conditions mobile scrolling can't replicate, driving attention levels and message retention that translate directly to business outcomes.

AI transforms these truths into actionable intelligence. Real-time brand lift measurement tracks awareness shifts as campaigns run. Attribution systems follow customer journeys across devices and time, revealing TV's dual impact: immediate conversions plus brand equity that compounds over quarters. Well-executed TV campaigns now match or beat search and social for direct response efficiency, but execution quality separates winners from also-rans by multiples, not margins.

The verdict is unequivocal: television advertising works when executed with modern intelligence. That means predictive targeting that anticipates response, creative systems that adapt in real-time, and measurement that captures influence across every touchpoint. 

AI in creative development for CTV

But let’s rewind for a moment because there’s one aspect of AI that fascinates me: its impact on creative development for CTV. The old model—22-week production timelines, million-dollar shoots, and one-size-fits-all hero spots—just doesn’t fit CTV’s need for precision and personalization. AI changes everything, not by automating the old, but by reimagining how stories are crafted with data at their core.

The creative multiplier effect

Progressive Insurance discovered what happens when AI meets creative ambition. Working with Claritas's generative AI platform, they compressed 22 weeks of traditional audio production into two weeks, generating 96 distinct ad variations from a single brief. Each variant spoke to specific audience personas with tailored scripts, voice modulations, and offers—impossible math under traditional production models.

Research shows that by 2026, AI-generated creative will account for 40% of all digital video ads. 

This represents the fastest creative transformation in advertising history.

Dynamic creative at television scale

Dynamic Creative Optimization transforms CTV from broadcast medium to performance channel. CPG brands using advanced DCO achieve 98.6% video completion rates, nearly five percentage points above standard video ads. The technology adapts creative elements in real-time based on household data, weather conditions, inventory levels, and viewing context.

Consider the operational reality: A retailer can automatically adjust promotional offers based on local store inventory. A QSR brand modifies menu emphasis based on time of day and regional preferences. A travel company showcases destinations based on search history and booking patterns. Research shows this kind of personalization lifts engagement by 6 to 9 percentage points.

Pre-production intelligence

AI's most transformative impact occurs before cameras roll. Three-quarters of advertising professionals using AI apply it to scriptwriting, while 55% use it for visual generation. GenAI models trained on performance data can predict creative effectiveness before production begins, analyzing scripts for emotional resonance, clarity scores, and attention patterns.

The workflow evolution is striking. Creative teams prompt AI with brand guidelines, audience insights, and campaign objectives. Within minutes, they receive dozens of concept variations, each optimized for different segments, each maintaining brand voice. Human creativity focuses on strategy and refinement rather than initial ideation, accelerating the path from insight to execution.

💡 What are some cool AI TV advertising tools? Perhaps the smartest AI tools are those that are reinventing TV ads. Waymark turns a business’s digital footprint into ready-to-air TV spots in minutes. Innovid’s platform swaps products, offers, and messages on the fly, tailoring every CTV ad in real time. Instreamatic churns out thousands of personalized audio ads for streaming, while CreativeX scans every frame to predict winners before a campaign even goes live. These are slashing production from months to days. Isn’t that cool?

The performance paradigm

Creative effectiveness in CTV demands new metrics. View-through rates matter less than business outcomes. Marketers using GenAI report performance improvement as the top benefit. The technology enables testing at unprecedented scale, with AI generating pre-visualization assets for rapid market validation.

Smart advertisers implement closed-loop measurement between creative variations and conversion data. Machine learning identifies which creative elements drive specific outcomes: color psychology that increases consideration, narrative structures that improve recall, offer presentations that accelerate purchase decisions. These insights compound across campaigns, creating institutional knowledge that improves every subsequent creative decision.

Infrastructure for innovation

Success requires more than AI tools; it demands reimagined workflows and organizational structures. Traditional agency models with decades-old processes and sequential handoffs cannot match the speed of AI-enabled competitors. Forward-thinking organizations create cross-functional pods where strategists, creatives, and data scientists collaborate in real-time, using AI as a force multiplier rather than a replacement. The planners and buyers who thrive aren't necessarily the most technical: they're the ones who've always asked 'why' before 'how much.

👉 For a deeper dive into what’s happening in media and what lies ahead, read our full outlook: The 2025 Media Reality.

Conclusion: What agencies should do next

The gap between CTV's promise and far too many agencies' execution has never been wider. While the technology races forward, too many strategies remain anchored in linear thinking. The winners won't be those with the biggest budgets or the flashiest creative; they'll be those who reimagine what television advertising can accomplish.

The strategy audit that matters

Start with a reality check. If you’re planning CTV in a silo, you’re leaving serious money on the table. True cross-screen management isn’t just running the same ad everywhere but knowing how TV exposure boosts search, drives mobile conversions, and amplifies your brand at every touchpoint.

Forget vanity metrics. Modern CTV demands KPI frameworks that connect impression delivery to revenue generation. The real question isn’t what you paid per thousand views, but what those views actually delivered to your bottom line.

The transparency test

Supply path opacity kills performance. If you can't trace exactly how your dollar reaches a publisher, you're likely paying hidden taxes through revenue share agreements and platform fees. Demand direct publisher relationships. Audit your supply chain. Every intermediary between you and inventory represents margin compression and attribution noise.

AI adoption separates leaders from laggards, but implementation matters more than press releases. Using AI to generate keyword variations isn't transformation. Using AI to predict creative performance, optimize campaigns in real-time, and compound learnings across your entire book of business? That’s how you win.

The path forward

Television advertising stands at an inflection point. The infrastructure exists to deliver personalized creative at scale. The data exists to measure impact with precision. The AI exists to optimize performance continuously. What's missing is the willingness to abandon comfortable but outdated approaches. 

Nobody's asking you to forget what you know. They're offering you tools to finally prove what you've always suspected about smarter media buying.

For agencies ready to lead, the roadmap is clear. Build integrated planning capabilities that treat television as part of a unified system. Implement measurement frameworks that capture true business impact. Demand supply chain transparency that ensures every dollar works harder. Put AI to work.

The future of television advertising is here. With technology in everyone’s hands, only smart action sets you apart. The tools exist. The opportunity is massive. The time is now. Will you be the winner?

Let’s make it happen. Contact me at geoff.halsema@aidigital.com or via Linkedin.

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